AC553_Chapter_14_Part V - Chapter 14 Taxation of...

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Chapter 14 Taxation of Corporations —Basic Concepts Part V ©2011 CCH. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com
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2 of 19 Chapter 14 Exhibits Chapter 14, Exhibit Contents A 1. Corporate Tax Returns 2. Book-Income Adjustments – Example 3. Schedule M-3 4. Schedule UTP 5. Book-Income Differences: Financial Accounting Treatment
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3 of 19 Corporate Tax Returns n Most corporations required to file corporate tax return each year u Return must be filed even if corporation has no taxable income n Also required to make estimated tax payments throughout the year unless its estimated tax for the year is < $500 n File Form 1120 by 15th day of third month following end of its tax year u Form 1120 generally reports taxable income according to various tax rules Chapter 14, Exhibit 1a
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4 of 19 Corporate Tax Returns n Schedules on Form 1120 u Schedule L - Beginning and ending balance sheets u Schedule M-1 - Reconciliation of income (loss) per books with taxable income u Schedule M-2 - Analysis of unappropriated retained earnings per books u Schedule M-3 - Net income (loss) reconciliation for corporations with total assets ≥ $10,000,000 « Required for large and midsize firms in lieu of Schedule M-1 Net income on financial books of corporation may differ from taxable income on its return u Differences are either permanent or temporary n Schedule M-1 used to reconcile these differences Chapter 14, Exhibit 1b
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5 of 19 Corporate Tax Returns n Reconciling elements fall into four categories: 1. Expenses taken on books but not taken on tax return (e.g., federal income taxes) 2. Expenses not taken on books but taken on tax return (e.g., charitable contribution carryovers from earlier tax years) 3. Income reported on books but not reported on tax return (e.g., tax- exempt municipal bond interest) 4. Income not reported on books but reported on tax return (e.g., prepayments recognized as income because of claim of right doctrine) n Schedule M-2 serves as a bridge of two balance sheets n Reconciliation of retained earnings serves to disclose unusual transactions which have a bearing on corporation or its shareholders Chapter 14, Exhibit 1c
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This note was uploaded on 03/26/2012 for the course ACCT 553 taught by Professor Seda during the Spring '10 term at Keller Graduate School of Management.

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AC553_Chapter_14_Part V - Chapter 14 Taxation of...

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